The customer has a large number of SKUs and a wide range of optimal inventory levels. In order to fulfill their sales commitments to customers, they require a short inventory replenishment lead time from Engineered Profiles, ideally within one to two weeks. Additionally, they need the flexibility to adjust the order mix right up until those orders are placed. Once the replenishment order is placed, spikes or last-minute sales orders can impact Engineered Profiles' ability to accurately match the correct inventory demand levels.
The required flexibility, combined with the challenge of optimizing run size efficiency, makes managing this issue with additional inventory both costly and problematic. It was determined that the earliest point when actual demand was known occurred when the customer's order fulfillment system recognized their customer's purchase order (PO). This recognition happened one to two weeks before the demand was communicated to Engineered Profiles for replenishment, which was based on when the parts were actually shipped to the customer. Monitoring this on a daily basis is nearly impossible and relies on constant communication, often leading to decisions based on outdated information.
Engineered Profiles implemented a clear solution that solved the supply chain issues. Our system was connected directly to the customer's ERP system so we could see PO Activity real time. This allowed us to develop an algorithm that could constantly massage and In addition this would occur much earlier in the fulfillment cycle and allow for far more flexibility for last minute changes or adjustments to the extrusion run sequence.
With the help from the customer's IT department, Engineered Profiles was able to develop a nightly report that pulled the customer's sales demand in 24-hour increments and automatically sent that data file back to us. While not quite in real time, this 24-hour window of information was far more accurate and timely than the previous manual methods and allowed sufficient time for Engineered Profiles to maximize replenishment order mix. This resulted in a higher degree of accuracy and a reduction of stock outs to nearly zero while actually reducing the total inventory required. The solution virtually eliminated the need for human intervention and freed up time in both the customer's procurement department and Engineered Profiles' customer service group.